Corporate and Offshore Ownership
In Portugal you will find that a reasonable proportion of properties are owned within a corporate structure (usually - higher priced/luxury properties valued at €1million).
Corporate Ownership of Portugal Property
Usually although not always this company will be domiciled in Delaware, Malta or perhaps the USA. There are more international locations that are able jurisdictions outside of Portugal, for ownership, the UK, New Zealand (White Jurisdictions) being examples. Countries beyond of Portugal (“offshore centres”) where the corporation is domiciled are either classed as Black or White list Jurisdictions.
Black jurisdictions differ from white jurisdictions in the way that they can grant beneficial tax regimes (e.g. Isle of Man, Guernsey, Jersey, Gibraltar, and British Virgin Islands).
Black listed companies experience a greater tax with the outcome of many choosing to re-domicile to non-Black listed jurisdictions.
The house and property is an asset of the particular company and the buyer obtains and purchases the shares of that said company.
The moment that the property is sold the shares are sold by means of a shared purchase agreement, and so the company remains to be the owner of the home and property and the new buyer then becomes the owner of the company’s shares.
This purchase of the company takes place in the jurisdiction of the company’s domicile.
Similar to a private ownership property purchase, both buyer and vendor will be required to have a Portuguese lawyer.
The buyers Lawyers will need to carry out all the usual searches on the property in Portugal, and as is often the case most reputable lawyers will be familiar with this type of corporate property/company transaction.
Benefit of Corporate ownership for property valued at over €1million
Generally where a property is valued at under €1million it is seen as advisable to keep the property as a privately owned property. There will be costs involved in a Corporation owning a property and the running of the company in question. It may not be as financially viable for property much under €1million to be owned through a Corporation compared with private property ownership.
However when buying Property valued over €1million you may find there are benefits of Corporate ownership of property in Portugal.
Below is a chart, which shows some of the Costs involved for a Non-resident of Portugal, in the Buying, Selling and owning of a property in Portugal valued at €1million.
|Cost||Privately Owned Company||White Listed Corporate Ownership of Property||Black Listed Corporate Ownership of Property|
|Property purchase costs, (IMT)||6% Purchase Tax (IMT)||No IMT||8% Purchase Tax (IMT)|
|Stamp duty||0.8% Stamp Duty||No Stamp Duty||No Stamp Duty|
|Legal fees on purchase & sale||1 to 2%||1 to 2%||1 to 2%|
|Capital Gains tax on sale of property||25% on the profit (in Portugal)||None to be paid in Portugal||None to be paid in Portugal|
|Annual running costs of company||None||Between €1500 and €3750||Between €1500 and €3750|
|Annual property Tax (IMI). This is calculated on the property rateable value||Revalued since 2004 (0.2 to 0.4%) | Not valued (0.4 to 0.7%)||Revalued since 2004 (0.2 to 0.4%) | Not valued (0.4 to 0.7%)||1.00%. Or 2.00% if the property is not inhabited for more than a year.|
|Annual Fiscal representation||€250||€425||€425|
Corporate Ownership Benefits
- When property is owned by a White listed corporation there is No IMT to be paid, thus saving 6% if it was a private property purchase.
- Capital gains tax is not paid in Portugal on the profit of a sold property through corporate ownership. The capital gains made will then be subject to where the corporation is domiciled.
- Owners through a Corporation enjoy privacy/anonymity.
- Property sales via a corporate structure are very simple and tax efficient. The transfer of shares can be conducted in English through a Share purchase agreement.
- Under transfer of ownership due to death, under Portuguese law there is forced Heirship to one’s spouse and children. Thus individuals cannot choose whom they wish to receive their estate upon death. Through a corporate structure inheritance laws are applicable where the corporation is domiciled.
We will be able to refer you to reputable Portuguese & English speaking Lawyers in Portugal who have had many dealings in this type of property transaction.
For further information on corporate ownership of property, feel free to send any questions you may have relating to Corporate Property ownership to firstname.lastname@example.org.